Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Effective Hours of Rule 4753(c), 20742-20744 [2011-8917]
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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–FINRA–
2011–005), be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–8897 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64268; File No. SR–
NASDAQ–2011–051]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify the
Effective Hours of Rule 4753(c)
April 8, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 7,
2011, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or the ‘‘Exchange’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
NASDAQ is proposing to amend Rule
4753(c) to change the effective time of
the rule from 9:30 a.m. to 4 p.m., to 9:45
a.m. to 3:35 p.m.
The text of the proposed rule change
is below. Proposed new language is
italicized; proposed deletions are in
brackets.
*
*
*
*
*
mstockstill on DSKH9S0YB1PROD with NOTICES
4753. Nasdaq Halt and Imbalance
Crosses
(a)–(b) No change.
(c) For a pilot period ending six
months after the date of Commission
approval of SR–NASDAQ–2010–074,
between 9:45[30] a.m. and 3:35[4:00]
p.m. EST, the System will automatically
monitor System executions to determine
12 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
13 17
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whether the market is trading in an
orderly fashion and whether to conduct
an Imbalance Cross in order to restore
an orderly market in a single Nasdaq
Security.
(1) An Imbalance Cross shall occur if
the System executes a transaction in a
Nasdaq Security at a price that is
beyond the Threshold Range away from
the Triggering Price for that security.
The Triggering Price for each Nasdaq
Security shall be the price of any
execution by the System in that security
within the prior 30 seconds. The
Threshold Range shall be determined as
follows:
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ is proposing to amend Rule
4753(c) to change the effective time of
the rule from 9:30 a.m. to 4 p.m., to 9:45
a.m. to 3:35 p.m. On March 11, 2011,
Threshold
the Commission approved Rule 4753(c)
range away
Execution price
from triggering (the ‘‘Volatility Guard’’), a volatilityprice (percent) based pause in trading in individual
NASDAQ-listed securities traded on
$1.75 and under ...................
15 NASDAQ (‘‘NASDAQ Securities’’), as a
Over $1.75 and up to $25 ....
10 six month pilot applied to the NASDAQ
Over $25 and up to $50 .......
5 100 Index securities.3 The Volatility
Over $50 ...............................
3
Guard automatically suspends trading
(2) If the System determines pursuant in individual NASDAQ Securities that
are the subject of abrupt and significant
to subsection (1) above to conduct an
intraday price movements between 9:30
Imbalance Cross in a Nasdaq Security,
a.m. and 4 p.m. Eastern Standard Time
the System shall automatically cease
(‘‘EST’’). Volatility Guard is triggered
executing trades in that security for a
automatically when the execution price
60-second Display Only Period. During
of a pilot security moves more than a
that 60-second Display Only Period, the
fixed amount away from a preSystem shall:
established ‘‘triggering price’’ for that
(A) maintain all current quotes and
security. The triggering price for each
orders and continue to accept quotes
pilot security is the price of any
and orders in that System Security; and
execution by the system in that security
(B) Disseminate by electronic means
within the previous 30 seconds. For
an Order Imbalance Indicator every 5
each pilot security, the system
seconds.
(3) At the conclusion of the 60-second continually compares the price of each
execution in the system against the
Display Only Period, the System shall
prices of all system executions in that
re-open the market by executing the
security over the 30 seconds. Once
Nasdaq Halt Cross as set forth in
triggered, NASDAQ institutes a formal
subsection (b)(2)–(4) above.
(4) If the opening price established by trading halt during which time
NASDAQ systems are prohibited from
the Nasdaq Halt Cross pursuant to
subsection (b)(2)(A)–(D) above is outside executing orders. Members, however,
may continue to enter quotes and
the benchmarks established by Nasdaq
by a threshold amount, the Nasdaq Halt orders, which are queued during a 60second Display Only Period. At the
Cross will occur at the price within the
threshold amounts that best satisfies the conclusion of the Display Only Period,
the queued orders are executed at a
conditions of subparagraphs (b)(2)(A)
through (D) above. Nasdaq management single price, pursuant to NASDAQ’s
Halt Cross mechanism.4
shall set and modify such benchmarks
NASDAQ is preparing to implement
and thresholds from time to time upon
the Volatility Guard in the second
prior notice to market participants.
quarter of 2011, and through these
(d) No change.
preparations NASDAQ identified a
*
*
*
*
*
possible concern with the effective time
II. Self-Regulatory Organization’s
3 See Securities Exchange Act Release No. 64071
Statement of the Purpose of, and
(March 11, 2011), 76 FR 14699 (March 17, 2011)
Statutory Basis for, the Proposed Rule
(SR–NASDAQ–2010–074). Amendment 1 to SR–
Change
NASDAQ–2010–074 designated the NASDAQ 100
Index as the 100 pilot securities.
In its filing with the Commission, the
4 The Nasdaq Halt Cross is ‘‘the process for
Exchange included statements
determining the price at which Eligible Interest
concerning the purpose of and basis for
shall be executed at the open of trading for a halted
the proposed rule change and discussed security and for executing that Eligible Interest.’’
any comments it received on the
See Nasdaq Rule 4753(a)(3).
PO 00000
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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
mstockstill on DSKH9S0YB1PROD with NOTICES
of the Volatility Guard. As currently
proposed, the Volatility Guard could
interfere with the effective hours of
NASDAQ’s opening and closing crosses
should a Volatility Guard halt occur
during a cross process. The NASDAQ
opening and closing crosses are price
discovery facilities that cross orders at
a single price. The crosses enable
market participants to execute on-open
and on-close interest.5 NASDAQ is
proposing to change the effective time of
the pilot to 9:45 a.m. until 3:35 p.m.
EST to avoid potential interference with
the crosses, and the orderly opening and
closing of the market.
NASDAQ notes that the proposed
effective time is identical to the effective
time of the single-stock trading pause
pilot adopted by multiple U.S. markets,
including NASDAQ, (the ‘‘Circuit
Breaker Pilot’’).6 In approving the
Circuit Breaker Pilot, the Commission
noted that limiting the effective time of
the pilot to 9:45 a.m. until 3:35 p.m.
EST would ensure that existing
procedures designed to facilitate orderly
openings and closings would not be
interfered with. As a consequence,
NASDAQ believes that adopting the
identical effective time as the Circuit
Breaker Pilot will reasonably ensure that
the orderly opening and closing of the
markets is not interfered with by the
Volatility Guard.
NASDAQ also believes that, as a
complement to the Circuit Breaker Pilot,
it is important that Volatility Guard’s
effective time mirror that of the Circuit
Breaker Pilot. The Circuit Breaker Pilot
applies to the securities of the S&P 500
Index, Russell 1000 Index and certain
exchange-traded products. As such,
there is certain overlap between the
securities covered by the Circuit Breaker
5 The crosses generate opening and closing prices
that are widely used by industry professionals
including Russell Investments, Standard & Poor’s
and Dow Jones.
6 On June 10, 2010, the Commission approved the
Circuit Breaker Pilot, which instituted new circuit
breaker rules that pause trading for five minutes in
a security included in the S&P 500 Index if its price
moves ten percent or more over a five-minute
period. See Securities Exchange Act Release Nos.
62251 (June 10, 2010), 75 FR 34183 (June 16, 2010)
(SR–FINRA–2010–025); 62252 (June 10, 2010), 75
FR 34186 (June 16, 2010) (SR–NASDAQ–2010–061,
et al.). On September 10, 2010, the Circuit Breaker
Pilot was expanded to include securities in the
Russell 1000 Index and certain exchange-traded
products. See Securities Exchange Act Release Nos.
62883 (September 10, 2010), 75 FR 56608
(September 16, 2010) (SR–FINRA–2010–033); 62884
(September 10, 2010), 75 FR 56618 (September 16,
2010) (SR–NASDAQ–2010–079, et al.). The Circuit
Breaker Pilot is scheduled to expire on April 11,
2011, however, the Exchanges are filing proposals
with the Commission to extend the pilot to August
11, 2011. See e.g., Securities Exchange Act Release
No. 63505 (December 9, 2010), 75 FR 78302
(December 15, 2010) (SR–NASDAQ–2010–162).
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18:37 Apr 12, 2011
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Pilot and Volatility Guard.7 Such a
consistent approach to the effective time
will lessen the potential for investor
confusion surrounding the timing and
operation of the two processes.
Accordingly, NASDAQ believes
harmonizing the intra-day effective time
of the Volatility Guard with that of the
Circuit Breaker Pilot will better serve
the goal of working seamlessly with the
cross-market pause and will avoid
potential interference with the orderly
opening and closing of the markets.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,8 in
general and with Sections 6(b)(5) of the
Act,9 in particular in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
NASDAQ believes that the proposed
rule meets these requirements in that it
promotes transparency and uniformity
among the Circuit Breaker Pilot and the
Volatility Guard. Further, the proposed
changes will ensure that the opening
and closing processes of the markets are
not interfered with by the Volatility
Guard.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s
Statement on Comments Regarding the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change: (1) Does not significantly affect
7 See Securities Exchange Act Release No. 62468
(July 7, 2010), 75 FR 41258 (July 15, 2010) (SR–
NASDAQ–2010–074) (discussing how Volatility
Guard operates in relation to the Circuit Breaker
Pilot).
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(5).
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20743
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms does not become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) 10 of the Act and
Rule 19b–4(f)(6) thereunder.11
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing.12 However, Rule 19b–
4(f)(6)(iii) 13 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.
NASDAQ has requested that the
Commission waive the 30-day operative
delay. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. This
proposed rule change will reduce the
effective time of the Volatility Guard as
the current effective time of the
Volatility Guard could interfere with the
NASDAQ opening and closing
processes. This proposed rule change
will also make the effective time of the
Volatility Guard consistent with the
Circuit Breaker Pilot. Waiving the
operative delay will ensure that the
proposed change in the effective time of
the Volatility Guard is both effective
and operative by the date on which
NASDAQ implements the Volatility
Guard. For this reason, the Commission
designates the proposed rule change to
be operative upon filing with the
Commission.14
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission notes that the
Exchange has met this requirement.
13 Id.
14 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
11 17
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20744
Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–051 on the
subject line.
Paper Comments
mstockstill on DSKH9S0YB1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Cathy Ahn,
Deputy Secretary.
[FR Doc. 2011–8917 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64264; File No. SR–FINRA–
2011–008]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of a Longer Period for Commission
Action on Proposed Rule Change To
Require Public Disclosure of Any
Access or Post-Transaction Fees for
Executions Against a Public Quotation
in an OTC Equity Security
April 8, 2011.
On February 18, 2011, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
All submissions should refer to File
Exchange Commission (‘‘Commission’’),
Number SR–NASDAQ–2011–051. This
pursuant to Section 19(b)(1) of the
file number should be included on the
Securities Exchange Act of 1934
subject line if e-mail is used. To help the
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
Commission process and review your
proposed rule change to require each
comments more efficiently, please use
member to disclose on its website any
only one method. The Commission will fees imposed against its published
post all comments on the Commission’s quotation in any OTC Equity Security,
Internet Web site (https://www.sec.gov/
consistent with FINRA Rule 6450
rules/sro.shtml). Copies of the
(Restrictions on Access Fees). The
submission, all subsequent
proposed rule change was published for
amendments, all written statements
comment in the Federal Register on
with respect to the proposed rule
March 3, 2011.3 The Commission
change that are filed with the
received two comments on the
Commission, and all written
proposal.4
Section 19(b)(2) of the Act 5 provides
communications relating to the
that, within 45 days of the publication
proposed rule change between the
Commission and any person, other than of notice of the filing of a proposed rule
change, or within such longer period up
those that may be withheld from the
to 90 days as the Commission may
public in accordance with the
designate if it finds such longer period
provisions of 5 U.S.C. 552, will be
to be appropriate and publishes its
available for Web site viewing and
reasons for so finding or as to which the
printing in the Commission’s Public
self-regulatory organization consents,
Reference Room, 100 F Street, NE.,
the Commission shall either approve the
Washington, DC 20549, on official
proposed rule change, disapprove the
business days between the hours of 10
proposed rule change, or institute
a.m. and 3 p.m. Copies of such filing
proceedings to determine whether the
also will be available for inspection and
copying at the principal office of the
15 17 CFR 200.30–3(a)(12).
Exchange. All comments received will
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
be posted without change; the
3 See Securities Exchange Act Release No. 63960
Commission does not edit personal
(February 24, 2011), 76 FR 11829 (‘‘Notice’’).
identifying information from
4 See Letter from Daniel Zinn, General Counsel,
submissions. You should submit only
OTC Markets Group, Inc., to Elizabeth M. Murphy,
information that you wish to make
Secretary, Commission, dated March 22, 2011
(‘‘OTC Markets Letter’’) and letter from Kimberly
publicly available. All submissions
Unger, Executive Director, The Security Traders
should refer to File Number SR–
Association of New York, Inc. to Elizabeth M.
NASDAQ–2011–051 and should be
Murphy, Secretary, Commission, dated April 6,
2011 (‘‘STANY Letter’’).
submitted on or before May 4, 2011.
5 15
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18:37 Apr 12, 2011
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U.S.C. 78s(b)(2).
Frm 00122
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proposed rule change should be
disapproved. The 45th day for this filing
is April 17, 2011.
The Commission is hereby extending
the 45-day period for Commission
action on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change. The extension of time will
ensure that the Commission has
sufficient time to consider and take
action on FINRA’s proposal in light of,
among other things, the comments
received on the proposal.
Accordingly, pursuant to Section
19(b)(2)(A)(ii)(I) of the Act 6 and for the
reasons stated above, the Commission
designates May 25, 2011, as the date by
which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
File No. SR–FINRA–2011–008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–8916 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64263; File No. SR–
NASDAQ–2011–050]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify an
Initial Listing Standard for the Nasdaq
Global Select Market
April 8, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 1,
2011, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and III below, which Items
have been prepared by Nasdaq. Nasdaq
has designated the proposed rule change
as effecting a change described under
Rule 19b–4(f)(6) under the Act,3 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
6 15
U.S.C. 78s(b)(2)(A)(ii)(I).
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
7 17
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]]>Agencies
[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20742-20744]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8917]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64268; File No. SR-NASDAQ-2011-051]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the Effective Hours of Rule 4753(c)
April 8, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 7, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
NASDAQ is proposing to amend Rule 4753(c) to change the effective
time of the rule from 9:30 a.m. to 4 p.m., to 9:45 a.m. to 3:35 p.m.
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *
4753. Nasdaq Halt and Imbalance Crosses
(a)-(b) No change.
(c) For a pilot period ending six months after the date of
Commission approval of SR-NASDAQ-2010-074, between 9:45[30] a.m. and
3:35[4:00] p.m. EST, the System will automatically monitor System
executions to determine whether the market is trading in an orderly
fashion and whether to conduct an Imbalance Cross in order to restore
an orderly market in a single Nasdaq Security.
(1) An Imbalance Cross shall occur if the System executes a
transaction in a Nasdaq Security at a price that is beyond the
Threshold Range away from the Triggering Price for that security. The
Triggering Price for each Nasdaq Security shall be the price of any
execution by the System in that security within the prior 30 seconds.
The Threshold Range shall be determined as follows:
------------------------------------------------------------------------
Threshold
range away
from
Execution price triggering
price
(percent)
------------------------------------------------------------------------
$1.75 and under......................................... 15
Over $1.75 and up to $25................................ 10
Over $25 and up to $50.................................. 5
Over $50................................................ 3
------------------------------------------------------------------------
(2) If the System determines pursuant to subsection (1) above to
conduct an Imbalance Cross in a Nasdaq Security, the System shall
automatically cease executing trades in that security for a 60-second
Display Only Period. During that 60-second Display Only Period, the
System shall:
(A) maintain all current quotes and orders and continue to accept
quotes and orders in that System Security; and
(B) Disseminate by electronic means an Order Imbalance Indicator
every 5 seconds.
(3) At the conclusion of the 60-second Display Only Period, the
System shall re-open the market by executing the Nasdaq Halt Cross as
set forth in subsection (b)(2)-(4) above.
(4) If the opening price established by the Nasdaq Halt Cross
pursuant to subsection (b)(2)(A)-(D) above is outside the benchmarks
established by Nasdaq by a threshold amount, the Nasdaq Halt Cross will
occur at the price within the threshold amounts that best satisfies the
conditions of subparagraphs (b)(2)(A) through (D) above. Nasdaq
management shall set and modify such benchmarks and thresholds from
time to time upon prior notice to market participants.
(d) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is proposing to amend Rule 4753(c) to change the effective
time of the rule from 9:30 a.m. to 4 p.m., to 9:45 a.m. to 3:35 p.m. On
March 11, 2011, the Commission approved Rule 4753(c) (the ``Volatility
Guard''), a volatility-based pause in trading in individual NASDAQ-
listed securities traded on NASDAQ (``NASDAQ Securities''), as a six
month pilot applied to the NASDAQ 100 Index securities.\3\ The
Volatility Guard automatically suspends trading in individual NASDAQ
Securities that are the subject of abrupt and significant intraday
price movements between 9:30 a.m. and 4 p.m. Eastern Standard Time
(``EST''). Volatility Guard is triggered automatically when the
execution price of a pilot security moves more than a fixed amount away
from a pre-established ``triggering price'' for that security. The
triggering price for each pilot security is the price of any execution
by the system in that security within the previous 30 seconds. For each
pilot security, the system continually compares the price of each
execution in the system against the prices of all system executions in
that security over the 30 seconds. Once triggered, NASDAQ institutes a
formal trading halt during which time NASDAQ systems are prohibited
from executing orders. Members, however, may continue to enter quotes
and orders, which are queued during a 60-second Display Only Period. At
the conclusion of the Display Only Period, the queued orders are
executed at a single price, pursuant to NASDAQ's Halt Cross
mechanism.\4\
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\3\ See Securities Exchange Act Release No. 64071 (March 11,
2011), 76 FR 14699 (March 17, 2011) (SR-NASDAQ-2010-074). Amendment
1 to SR-NASDAQ-2010-074 designated the NASDAQ 100 Index as the 100
pilot securities.
\4\ The Nasdaq Halt Cross is ``the process for determining the
price at which Eligible Interest shall be executed at the open of
trading for a halted security and for executing that Eligible
Interest.'' See Nasdaq Rule 4753(a)(3).
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NASDAQ is preparing to implement the Volatility Guard in the second
quarter of 2011, and through these preparations NASDAQ identified a
possible concern with the effective time
[[Page 20743]]
of the Volatility Guard. As currently proposed, the Volatility Guard
could interfere with the effective hours of NASDAQ's opening and
closing crosses should a Volatility Guard halt occur during a cross
process. The NASDAQ opening and closing crosses are price discovery
facilities that cross orders at a single price. The crosses enable
market participants to execute on-open and on-close interest.\5\ NASDAQ
is proposing to change the effective time of the pilot to 9:45 a.m.
until 3:35 p.m. EST to avoid potential interference with the crosses,
and the orderly opening and closing of the market.
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\5\ The crosses generate opening and closing prices that are
widely used by industry professionals including Russell Investments,
Standard & Poor's and Dow Jones.
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NASDAQ notes that the proposed effective time is identical to the
effective time of the single-stock trading pause pilot adopted by
multiple U.S. markets, including NASDAQ, (the ``Circuit Breaker
Pilot'').\6\ In approving the Circuit Breaker Pilot, the Commission
noted that limiting the effective time of the pilot to 9:45 a.m. until
3:35 p.m. EST would ensure that existing procedures designed to
facilitate orderly openings and closings would not be interfered with.
As a consequence, NASDAQ believes that adopting the identical effective
time as the Circuit Breaker Pilot will reasonably ensure that the
orderly opening and closing of the markets is not interfered with by
the Volatility Guard.
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\6\ On June 10, 2010, the Commission approved the Circuit
Breaker Pilot, which instituted new circuit breaker rules that pause
trading for five minutes in a security included in the S&P 500 Index
if its price moves ten percent or more over a five-minute period.
See Securities Exchange Act Release Nos. 62251 (June 10, 2010), 75
FR 34183 (June 16, 2010) (SR-FINRA-2010-025); 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010) (SR-NASDAQ-2010-061, et al.). On
September 10, 2010, the Circuit Breaker Pilot was expanded to
include securities in the Russell 1000 Index and certain exchange-
traded products. See Securities Exchange Act Release Nos. 62883
(September 10, 2010), 75 FR 56608 (September 16, 2010) (SR-FINRA-
2010-033); 62884 (September 10, 2010), 75 FR 56618 (September 16,
2010) (SR-NASDAQ-2010-079, et al.). The Circuit Breaker Pilot is
scheduled to expire on April 11, 2011, however, the Exchanges are
filing proposals with the Commission to extend the pilot to August
11, 2011. See e.g., Securities Exchange Act Release No. 63505
(December 9, 2010), 75 FR 78302 (December 15, 2010) (SR-NASDAQ-2010-
162).
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NASDAQ also believes that, as a complement to the Circuit Breaker
Pilot, it is important that Volatility Guard's effective time mirror
that of the Circuit Breaker Pilot. The Circuit Breaker Pilot applies to
the securities of the S&P 500 Index, Russell 1000 Index and certain
exchange-traded products. As such, there is certain overlap between the
securities covered by the Circuit Breaker Pilot and Volatility
Guard.\7\ Such a consistent approach to the effective time will lessen
the potential for investor confusion surrounding the timing and
operation of the two processes. Accordingly, NASDAQ believes
harmonizing the intra-day effective time of the Volatility Guard with
that of the Circuit Breaker Pilot will better serve the goal of working
seamlessly with the cross-market pause and will avoid potential
interference with the orderly opening and closing of the markets.
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\7\ See Securities Exchange Act Release No. 62468 (July 7,
2010), 75 FR 41258 (July 15, 2010) (SR-NASDAQ-2010-074) (discussing
how Volatility Guard operates in relation to the Circuit Breaker
Pilot).
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2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general and with Sections
6(b)(5) of the Act,\9\ in particular in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. NASDAQ believes that the
proposed rule meets these requirements in that it promotes transparency
and uniformity among the Circuit Breaker Pilot and the Volatility
Guard. Further, the proposed changes will ensure that the opening and
closing processes of the markets are not interfered with by the
Volatility Guard.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments Regarding the
Proposed Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\12\
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. NASDAQ has requested that the
Commission waive the 30-day operative delay. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. This proposed rule
change will reduce the effective time of the Volatility Guard as the
current effective time of the Volatility Guard could interfere with the
NASDAQ opening and closing processes. This proposed rule change will
also make the effective time of the Volatility Guard consistent with
the Circuit Breaker Pilot. Waiving the operative delay will ensure that
the proposed change in the effective time of the Volatility Guard is
both effective and operative by the date on which NASDAQ implements the
Volatility Guard. For this reason, the Commission designates the
proposed rule change to be operative upon filing with the
Commission.\14\
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\12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission notes that the Exchange has met this requirement.
\13\ Id.
\14\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
[[Page 20744]]
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2011-051 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2011-051. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
publicly available. All submissions should refer to File Number SR-
NASDAQ-2011-051 and should be submitted on or before May 4, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Cathy Ahn,
Deputy Secretary.
[FR Doc. 2011-8917 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P
